Fords launch of the 'Figo' is further proof of the importance of India's recovering auto market. Manufacturers hope India's growing appetite for small, inexpensive models - that make up 70% of Indian car sales - can prop up the struggling industry.

Domestic recovery

Remarkably, 40 new car models launched in India during the last twelve months and more are planned, next year VW will launch the 'Polo' and Nissan the 'Micra'. The market is broadening, in the past, 22 towns and cities accounted for over 66% of vehicle sales, now that figure is below 50%.

Further growth

Only Japan now manufactures more small vehicles than India and big auto is banking on India's small car market doubling in size over the next 10 years. For perspective, Society of Indian Automotive Manufacturer figures show that from April to August this year, car sales rose 13% to nearly 560,000 unit sales.

Government are supportive, S.N. Dash, secretary of India's department for heavy industry expects India's auto sector to contribute 10% of GDP by 2016.

Ford's late move

Having built cars in India since 1995, Ford has ignored the small car segment, losing ground to smaller more agile manufacturers. Maruti Suzuki, Hyundai and Tata Motors accounted for 77% of Indian car sales this fiscal year. PwC estimate that Ford's sales accounted for just 1.5% of the market during the first half of this year.

While Alan Mulally, President and CEO of Ford boasts, "We are entering the sweet spot of the Indian market... It's a game-changer for our Indian operation", you could argue that until now Ford haven't been in the game.

Ashvin Chotal, founder of Intelligence Automotive Asia commented, "Ideally they should have had a small car several years ago, but better late than never".

India becomes an export hub

To meet their targets, Ford plans to invest £304 million to double capacity of its Chennai factory to 200,000 units per year. In addition to domestic sales, the plan is to follow the example set by Hyundai India who exports nearly half their Indian production.

India's car exports grew 53% to more than 331,500 during the year ending March 2009, since then exports have risen 37%.

Image source - www.autonews.fr-i/luv/bangs